State of the Juice Industry Webinar · Consumer Trends Macro Trends Influencing New Product...
Transcript of State of the Juice Industry Webinar · Consumer Trends Macro Trends Influencing New Product...
State of the Juice Industry Webinar
June 2016
Quality products grown by innovative thinkers. 2
AGENDA
Consumer Trends
Macro Trends Influencing New
Product Launches
Retail Environment
Insights
Regulatory Hot Topics
Jamie Bradford Director of Product & Packaging Innovation [email protected]
Joe Cook Director of Analytics
Ian Wallace Director of Legal Affairs
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CONSUMER TRENDS
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CONSUMERS ARE INGREDIENT SAVVY
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Consumers pay high attention to the ingredients used in food/drinks they consume and are seeking simplification
Nothing artificial
Organic Pro-Active health
Naturally functional • • •
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CONSUMERS ARE EXPERIMENTING
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Consumers have more adventurous palates, seeking out new and unusual flavors when shopping for food/drinks
Premium quality
One-of-a-kind treasures
Culinary infused Bold flavors • • •
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CONSUMERS ARE CULTURALLY OPEN
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Consumers’ tastes have evolved due to exposure to other cultures
Multi-cultural Exotic Ancestral • •
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CONSUMERS’ LIFESTYLES ARE CHANGING
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Consumers are demanding more convenience products due to growing, on-the-go lifestyles
Convenience Urbanization Snackification • • • Changing Family Structure
MACRO TRENDS INFLUENCING NEW PRODUCT LAUNCHES
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SIMPLIFICATION
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MACRO TREND Consumers want foods that are more natural, less processed, made with familiar ingredients
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10
20
30
40
No additives/preservatives
All naturalproduct
Wholegrain Organic GMO-free% o
f ne
w la
unch
es
New global food & drink launches by natural claims 2013-15
2013 2014 2015
The focus is on clean labels, greater transparency, and more
artisanal values
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SIMPLIFICATION
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MACRO TREND
‘Free-from’ gains momentum as consumers look to avoid ‘bad
stuff’
0 10 20 30 40 50
Low/no/reducedlactose
Hormone-free
Gluten-free
Low/no/reducedallergen
No animal ingredients
% of new launches
New global food and drink launches with selected "free-from"-inspired claims, 2013-15
2013 2014 2015
Global organic food & beverage market is expected to reach
$211.44B by 2020
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PRO-ACTIVE HEALTH
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MACRO TREND
More consumers are thinking about how food impacts weight
and overall wellness 1
Weight conscious consumers look for value-added benefits in
food/beverage products 2
Protein
Fiber
Prebiotics
Probiotics
52% Americans say that the prospect of a ‘product that is naturally high in nutrients is ‘very appealing’
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PRO-ACTIVE HEALTH
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MACRO TREND
Nutrient-packed food and beverage items known as “superfoods” have become
increasingly popular in the past five years 3
Proportion of “Super” Food and Drink Products Launched by country, 2015
Kale
Pomegranate
Acai Berry
Avocado
Berries
Oats/Quinoa
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EXPERIENCE & ENJOYMENT
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MACRO TREND
Taste is by far the most important factor for consumers*
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1,931 internet users aged 18+ who have purchased non-alcoholic drinks at retail
Millennials are particularly attracted to ‘craft’ qualities and novel items 2
61% of consumers experiment with unusual flavors when shopping for food/drinks
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CHANGING LIFESTYLES
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MACRO TREND
Consumers are spending more time in transit.
Consumers are more and more demanding of convenience products due to an on-
the-go lifestyle
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26 MINUTES an American’s average one way commute 10.8MM Americans commute an hour or more to work each way
Portability
Consumers are more ‘time-crunched’ and will need solutions to meet their consumption patterns 3
Heat & Eat
Meal Kits
Grocerant ready meals
Meal Solutions
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RETAIL ENVIRONMENT INSIGHTS
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U.S. RETAIL ENVIRONMENT
HOW PEOPLE SHOP
WHERE PEOPLE SHOP
WHAT PEOPLE SHOP FOR
Affecting…
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HOW PEOPLE SHOP IS CHANGING
Positive job growth but any wage growth muted
Under-employment and tenuous consumer confidence limit increases in real spending power
WAGE GROWTH
INFLATION
Re-prioritizing shifts in spending habits
Consumers saving in some areas and indulging in other areas
45%
36%
25% 25% 23%
17% 15% 15% 14%
Q: What do you do with your spare cash?
KEY DRIVERS OF FLAT RETAIL SALES GROWTH:
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WHERE PEOPLE SHOP IS CHANGING
Exclusive 34%
2 Channels
37%
3 Channels
20%
4+ Channels
9%
-20%
-10%
0%
10%
20%
30%
40%
50%
$0$10$20$30$40$50$60$70$80$90
$100
Q4
2001
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2002
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2003
Q4
2004
Q4
2005
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2006
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2015
U.S.
Dol
lars
(bill
ions
)
Retail E-Commerce Sales% of Total Retail SalesRetail E-Commerce Sales % Change vs. Year Ago
Manufacturers close the gap w/ consumers
E-commerce, now 7.5% of total retail sales, projected to grow +12.5% annually through 2020
Lidl poised to open 100 stores by 2018
Lidl threat to steal share from most if not all existing retail formats
Consumers shopping multiple channels
Source: Nielsen
Source: U.S. Census Bureau Source: RNG
Channel Blurring
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WHAT PEOPLE SHOP FOR IS CHANGING
Significant growth in items claiming health & wellness benefits
Source: Nielsen Answers, Wellness Track, Total U.S. 52 wks ending 04/02/2016; Deloitte, “Capitalizing on the shifting consumer food value equation,” 2016
$27.1
$22.6
$14.7
$14.1
$12.2
$10.7
$7.9
$7.7
$6.3
$4.8
Kosher
Gluten Free
Natural Presence
Natural
Soy
No ArtificialColor/Flavor
GMO Free
Preservative Presence
Organic
Protein Presence
Bill
ions
Absolute $ Change vs 4-Years Ago
Private Brand has been another huge growth engine
Source: Nielsen Answers, Total U.S. – All Outlets Combined (xAOC), *52 weeks ending 04/02/2016
Private Brand has delivered
26% of topline sales growth since 2009 on only
18% of sales
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Total US PB $ Share
U.S. GDP Growth
(8%)
(6%)
(4%)
(2%)
+0%
+2%
+4%
+6%
+8%
10%
11%
12%
13%
14%
15%
16%
17%
18%
19%
20%
'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
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PRIVATE BRANDS: 25 YEARS OF GROWTH
Source: Nielsen and U.S. Census Bureau
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UNIVERSAL APPEAL OF PRIVATE BRAND
“Store Brand quality is as good as Nat’l Brands” • Greatest Generation
• Boomers
• Gen Xers
• Millennials
99% of U.S. households buy Private Brands
$640
$713
$723
$754
$761
$774
$753
< $20K
$20K - $29.9K
$30K - $39.9K
$40K - $49.9K
$50K - $69.9K
$70K - $99.9K
$100K +
Store Brands Annual Buying Rate by HH Income:
Source: Nielsen
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PRIVATE BRAND PROGRAMS EVOLVING
1970s - 1980s Generics
Low cost and quality generics
1990s Private Labels
Stores take ownership of program
Early 2000s Store Brands
Tiering of brands becomes widespread
Late 2000s Own Brands
Lifestyle brands are established
2010 - Today Consumer Brands
Brands deliver against consumer needs and drive differentiation
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PRIVATE BRAND STRENGTHOVERALL SUCCESS
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30
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50
60
70
80
90
100
60 70 80 90 100
Loyalty
Ma
ke a
spec
ial t
rip fo
r sto
re b
rand
s 24.6
28.2
29.6
30.7
40.2
78.7
Dollar General
Costco
Kroger
H-E-B
Wegmans
Aldi
Many leading retailers have the highest Private Brand shares
Consumer Reports survey confirms many of these same retailers score highest in Private Brand satisfaction
Strong link between Private Brand strength and overall customer loyalty
Source: Daymon Brand Radar Study 2016
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Carb Soft Drinks
1%
Bottled Water
8%
SS Juices
1%
Organic SS Juices
25%
Rfg Juices
1%
Energy Drinks
9%
Fresh Milk
10%
Sport Drinks
8%
Smoothies/Shakes
14%
Powdered Drinks
5%
Milk Alternative
2%
SS Teas
7%
Rfg Teas
14%
Liquid Coffee
20%
Single Serve Bev
11%
Ground Coffee
1%
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BEVERAGES ON FIRE
Source: Nielsen 52 wks ending 5/7/2016; Trends based on Retail $ % Growth
$18.5B $8.7B $9.4B
$5.6B $2.5B $12.1B $3.3B
$1.1B $1.2B $353MM $2.2B
$883MM $1.0B $3.6B $4.7B
$288MM
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TRENDS IN BEVERAGE Proactive Health • Rise of functional / enhanced
Organics • Growing at +25% in traditional FDM
Flavor & Texture • For ‘delightful discoveries’
Alternative Sweeteners • Natural sources; caffeine, too
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Organic SS Juices
25%
Lemonade & Lem. Blends
1%
Tetra-Pack Juices
4%
Pom-Blue & Pom-Lime
74%
Cherry
7%
Coconut
9%
Mango & Mango Blends
7%
Pineapple
9%
Ruby Red
5%
Lime
5%
Cider & Apple Varietals
36%
Peach
20%
Lights/Diet
13%
Sparkling Juices
8%
Prune
6%
Antioxidant-Rich
11%
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TRENDS IN SS JUICE
$288MM $560MM $373MM $10MM
$125MM $69MM $155MM $173MM
$35MM $86MM $22M $376MM
$97MM $160MM $126MM $455MM
Source: Nielsen 52 wks ending 5/7/2016; Trends based on Retail $ % Growth
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PRIVATE BRAND POTENTIAL
Source: Nielsen 52 wks ending 5/7/2016 + Daymon analysis
Private Brand is the #1 brand in the Juice category. Invest in your brand!
41%
20% 15%
22%
9%
33% 39%
28%
7% 2%
61%
42%
22%
57%
32%
43%
53%
65%
55%
42%
100% AppleJuice
100% CranJuice
CranCocktail
100%GrapeJuice
100%Pineapple
Juice
100% PruneJuice
100%Tomato
Juice
AppleCider
Lemonade/Limeade
SparklingJuice
National Avg Best in Class
Private Brand $ Share by Segment
Selling Private Brand is more profitable: For every $1 million in national brand sales converted to Private Brand, category margins usually increase by at least $100K
REGULATORY HOT TOPICS
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GMO LABELING
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HOT TOPIC
Vermont’s GMO Crusade 1
What’s The Issue?
Why It Matters
What You Can Do
All foods sold at retail in Vermont and produced with genetic engineering must be labeled by July 1, 2016
Confirm compliance with suppliers Execute on plan (sticker, label redesign) Advocate for uniform federal law
• More than 80% of processed foods contain GE • Fines of $1,000 per day per SKU • Supply chain nightmare
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DEFINITION OF “NATURAL”
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HOT TOPIC
What is “Natural”? 2
What’s the Issue?
Why It Matters
What You Can Do
Lack of FDA rules, state consumer protection laws and consumer friendly courts have created perfect storm for “natural” lawsuits
0 20 40 60 80 100
20132012201120102009200820072006200520042003
Natural Claim Lawsuits (2003-2013)
$5.0MM $6.1MM $2.4MM
• Well-funded law firms targeting food and beverages • Huge legal fees/settlement dollars at stake • Negative press and consumer confusion • FDA definition could stem the tide
Review product claims and litigation risk Consider alternatives (e.g. “simply,” “wholesome”)
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SODA TAX & NUTRITION FACTS
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HOT TOPICS
Philadelphia’s Soda Tax 3
What’s the Issue?
Why It Matters
What You Can Do
FDA’s New Nutrition Facts 4
What’s the Issue?
Why It Matters
What You Can Do
First major city to impose a tax on soda, diet soda, sugar-sweetened and artificially-sweetened beverages
FDA’s new rules on nutrition labeling will require all product labels to be revised by July 26, 2018
Set a compliance plan & timeline with suppliers Tune-in to next State of Juice webinar
• 1.5 cent per ounce tax (adds $1.01 to cost of a 2 liter and $2.16 to a 12-pack)
• Juices exempt (unless below 50% juice) • Taxes planned in more than 10 other cities
• Unprecedented resources and costs required to achieve compliance
Follow initiatives in your cities Track sales impact and adjust
assortment accordingly
PANEL Q&A
LET’S COLLABORATE!
Contact your sales representative today.
Confidential Property of Lassonde Pappas Quality products grown by innovative thinkers.
WE HAVE SOLUTIONS FOR ALL.
Retail Environment
Trends
Macro Trends
Consumer Trends
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THANK YOU.
Jamie Bradford Director of Product & Packaging Innovation [email protected]
Joe Cook Director of Analytics
Ian Wallace Director of Legal Affairs
Scott Langley Vice President of Business Development [email protected]